Banking industry face four major challenges; vast range of customer and varied data related to their transactions, ongoing regulatory changes, increasing consolidation and competition. To address these challenges, banks employ BI solution that helps them to make better business decisions and to better target performance goals.
Let’s look at each of them,
Data explosion – Banks handle immense amount of information, it is hard to keep track of important information and understand which information is important. This information comes from varied sources and formats, it would be a challenging task to make sense of consumer needs, track trends, identify profitable areas and monitor consumer credit from this data.
Consolidation – A host of mergers and acquisitions has resulted in shift in corporate goals and increased focus on managing internal systems. This consolidation activity gives banks an opportunity to greatly reduce overhead costs by integration processes. Banks must identify areas to increase efficiency, cut costs and reduce redundancies.
Regulation – Continued regulatory changes like Basel 2 and SOX Act, requires banks to re-examine many of the operational processes. Banks must integrate the finance and risk segment to comply with these regulations. Banks need information analysis and reporting capabilities to comply with these regulations and manage risks.
Competition – Increased competition is making banks look for ways to differentiate by providing top-quality customer service that cater to individual needs. Expanding customer base results in increased diversity in customer preferences and behaviours. Increased customer diversity means growing consumer demands. Banks need to respond to these demands effectively to ensure they retain customers and gain new-ones.
Each of the above challenges requires banks to be proactive in managing and utilizing corporate data to stay ahead of the competition.
BI solution gives the capability to analyze vast amounts of information to make best business decision. It also allows them to tap into their huge database and deliver easy-to-comprehend insight to improve business performance and maintain regulatory compliance.
BI solution allows companies to easily integrate and cross-reference vast amounts of information from multiple sources, identify relationships among the information, and learn how different factors affect each other.
BI solution allows multiple users to manipulate the data to glean the most from the information that affects their decision making.
BI solution caters to many people in different locations with varied skill levels who need to use this information, everyone from executives who need high-level customized summary data with drill-down capabilities to power users who need to create and design custom reports.
To sum it up, BI solution helps banks to increase revenue while maintaining or reducing costs. Business intelligence software allows banking enterprises to analyze profit and loss, including product sales analysis, campaign management, market segment analysis, and risk analysis. Banks can grow revenue by maximizing customer value over the long term and improving customer acquisition and retention. At the same time, reduce costs by managing risk and preventing fraud, as well as improving operational efficiency.